>> thank you, mr. chair. and welcome back. i have for quick questions, and perhaps the responses could be brief. but in the past, it's been very concerned about the fbi hate crime statistics mandate, and what we are asking for in addition, additional categories to that. you know that the advisory policy board will be meeting later on this year to discuss, make regulations on several new categories and i know you've already come out in support of the the addition of some these categories so i would like to ask you, is there an anymore, te justice department can do to assure -- specifically divisional anti-hindu and anti-arab hate crimes? >> i'll try to be as short as i can. we've come out in favor of recommended to the committee that has to make the determination that anti-sikh,

anti-hindu and a middle eastern ternryot sure how it was,a i hat crimes determination. so for for purposes of the two leading data we have come out favor of this. >> because i think the reason is that many people do not make those distinctions, and it gets a lot of folks into trouble. so we appreciate following up on that. one of the interesting things i noted in the fy '14 budget you request the removal of subtleties of language around inventories and relics. could you tell us all a bit more about your thinking on this issue and why it's important in light of the recent events? >> well, we think that the language that deals with carriers and relics is not appropriate an in that you can e these weapons that go old, can be made, can still be used.

and be quite effective in crimes that can cause great harm. we think that the restriction that is included, the prohibition there is one that simply is inconsistent with the harm that an old weapon can still cause. >> okay, i get that. appreciate that. in the areas of voter protecti protection, there's been a lot of americans who await an inordinate amount of time in the last election, most of them waiting a long time to ercise their most fundamental rights, and that's the right to vote. one of the things that was going on which states would limit the amount of days available for early voting or absentee voting as was limiting access to polling hours and stations in heavily minority areas, like

asian americans, african-americans, hispanic americans could and basically every other minority. was really unfairly targeted. could you tell the subcommittee about what the department is doing to stop this blatant abuse and how we can be helpful? >> this whole question of voting rights, some have tried to make a priority for. the department brought a number of suits last year against states, texas, south carolina, florida with regard to the photo id or the reduction of hours that people were allowed to try to cast a vote that i think it's inconsistent. we should be doing things that encourage people to vote, expand the number of hours. be mindful of the fact that there's the potential for fraud that we do things that make that possibility more real. but i think the congress can

help in allocating oefr grants to somehow encourage the states to keep the polls open longer, to make registration feature. to do those kind of things so we have more people in the process as opposed to fewer. that's not the american way to do anything other than that. we have seen, and resulted in thinthe civil rights movement ad 1965 voting rights act. we have seen what it means to keep people away from the polls. that's a dark time for this nation. that's not something we want to go back to. >> one of the things i've noticed that we're supposed have it on tuesday historically. is there anything that by statute or by constitution that requires it to be on a tuesday? or is that something that we can look at as -- new word democracy

she left two days and they usually declared its a nonwork day so it gives people an ability to get out there and vote. is there something that i don't understand about this designation of tuesday's? >> if you look at it it has a lot to do with the way our society was configured many years ago in a query and society. and tuesday was a great day, i do know, for market research or something along those lines but we are in a different time, a different erika and i think a lot, some the things states are doing with regard to expanding voting to weekends makes a lot of sense. people have to work generally on tuesdays. they are not bringing crops from the field into the place where they perhaps can vote. and so the notion of voting on saturday, voting on sunday, monday, expanding ours. those all the kinds of things i think we should be encouraging. >> thank.

one last thing. it's been about two years since this story was revealed, and it's been more than a year since the doj has committed during an investigation into the nypd's actions. i've asked if there would be some updates on the doj's review of the nypd's actions, and you found, you said that you found that very disturbing and he said these things are under review by your department. can you give us an update and the status of the nypd? >> yeah, those items, the stop and frisk policy, and he gets into the surveillance issue, those are still things that are under review by the department. there's a lawsuit presently underway, civil lawsuit that has been filed by -- that we are in the process still monitoring and gleaning information from that

lawsuit. so these two things, stop and frisk and these surveillance issues are matters that are underhe dertment. >> it's unr revi, and it sounds like it doesn't feel like there'spgre but because there is a lawsuit tt spending that you wait and see? or other other things that are more proactive that can be done, or the kind of a? >> i think it's a combination of both. there are certain things the department can be independently but i think this lawsuit is particularly important as information, there's testimony, evidence. we get a sense of the policies that have raised concerns in the minds of many people. so we continue to monitor that. that will help inform but not necessarily determine the action that the department will ultimately take. >> one last thing, mr. chairman, then -- in my district, there was an incident where an fbi agent had placed a monitoring

device underneath a young man's car to trace the person's movements. and there was no explanation or anything else like the. is not a practice that is still going on or is that a practice that has been deemed to be halted because it feels like it's very unconstitutional? i was just curious what your department's mandates or directions on that kind of behavior by agence? >> that's an investigative technique that is still used by the department. the supreme court sai that constitutes a search, so we change our policies so that when that technique is used and to the extent we can, warrants are now sought as opposed to simply doing it without the involvement of the courts. >> and the warrants are sought prior to the action? >> right, yes, sir.

>> mr. rooney? >> thank you, mr. chairman. mr. attorney general, i wanted to ask you a line of questioning if i could based on a letter that was written to your office from our chairman, mr. wolf, with regard to major nidal hasan and the fort hood shootings. it was dated march 15, 2013. they have not received a response as of yet, i believe. so i wanted to delve into this a little bit if i could. specifically, i want to raise a line, a line from the letter that was from a former colleague of ours, mr. mccue, is now the secretary of the army, and he was interviewed in a "nightline" report sayingt dg purple hearts could adversely affectheriofr a soldier, so

to declare a soldier of a fortress, we are told, i'm not an attorney and i don't run the justice department, but we were told that would have a profound effect on the ability to conduct the trial. so this is sort of the basis of where i want to go with my line of questioning. and issues revolve around workplace violence versus acts of terror, whether or not victims would receive a purple heart or not and why and how that might taint the trial of mr. assad and, of course, your role in this because he specifically implies, i believe, in his quote that the justice department here has a role, all in the overview of your budget request and how we move forward. i just want to preface by saying

i served at fort hood. my son was born at fort hood on five days before 9/11, and i'm very fully with the up-tempo nature of that post. we have two divisions there, along with thre '04 -- can be a, d i was a young cptain there a few years ck,ndso for me it's somewhat pernal. i was also a judge advocate there. i prosecuted cases in the building that major hasan is being prosecuted, and another prosecuted. i knew the former defense attorney very well. so i just want to try to get to, if we can, a little bit of some clarity on this issue which i think the victims of their certainly deserve. so my first question is, and if you could keep these answers as much as possible to yes or no so i can get to as many as

possible, did dod officials consult you or members of your department regarding the decision to designate hasan's attack on military and civilian personnel at fort hood as an act of workplace violence speaks well, this is an added that is not yes or no, but might help with the line of questioning the i'm just not familiar with what interaction with had with the department of defense with regard to this issue. >> if the witness would yield. this is a gem that's being prosecuted by dod, right? by the department of defense? not by the department of justice. and john mchugh, choose a record can be clear, the former republican member of the house who serves in his second term now in the obama administration, and this is a military procedure in terms of the trial of this gentleman. and i just want to make sure the record is clear, even though the gentleman who was a great member

and has every right to question the attorney general, but it's not something the department of justice handles. >> and i appreciate that. the only reason i bring it up is because mr. mchugh himself said in this interview, that i'm not an attorney and i don't run the justice department, but we are told that the purple heart award would have a profound affect on the ability to conduct a fair trial. so the answer by the secretary of the army and implies that the justice department has some in albany. and that's what i'm asking. so if your answer to that is no, then we certainly can move on. >> as far as i know, the decision to award purple hearts does not influence in the bud with the justice department said that i will look at that, and to the extent we've had some interaction with the defense department, relay that to you. but i think what the congressman has said, that's correct, this is a military prosecution but it does not involve the justice department we are not involved

in making purple heart decisions. but if we've had some interaction i will share those. i'm just not aware. >> would the gentleman yield? mr. rooney is accurate though and i have the letter, i just folded up. mr. meese you said i'm not an attorney, i don't run the justice department. there is an inference i think the mr. rooney is right that before they did anything, they went to the justice department, and quite frankly the administration has treated these people very, very poorly. some are in the audience here today, very, very poorly. the inference is, unless mchugh misspoke that they did call just a few for the did anything. i yield back to the gentleman. >> are you aware, mr. attorney general, who, what person in the administration made the call to gain that a workplace violence incidents? >> no. i'm not aware. >> okay, if i could i just want to continue on if all this question are going to be no, then i survey understand, but i

want to continue on with the line of questioning. can you recall any case in your role as the attorney general where a case was tried as a workplace violence in which the perpetrator had a prior fbi documentedn al qaedleader like nwa awl dn went on to murder 13 people? is that something that you've ever seen before as deemed workplace violence case? >> i'm not for me with the facts, no. >> -- not familiar with the facts. >> i assume you agree mr. anwar al-awlaki is a terrorist since we killed in yemen? >> that he was a terrorist. >> yeah, correct. so the relationship between awlaki and mr. hasan is well documented. we have the commission report.

are you familiar with that? >> yes. >> all right. which went into excruciating detail about the relationship and what we knew or what we didn't know. or what we should of known and what we neglected to act on. immediately following the fort hood attack on members of our military, was any terrorism investigative or prosecutorial authority sought from the department's national security division? in other words, did anybody get with you for guidance or to see if you are oi be >> ion't know.as we will have to look into that. i just don't know the answer. know if it was approved or denied? >> i don't know. >> okay. and i don't know, again, if you're not aware of a lot of this stuff, then what i'm about

to ask is, one of the things that sort of confused me when i was preparing my last questioning for today and inference by mr. hickey that the justice department has some role and that we weren't about taking the trial, which i did, remember a comment you made in the past about ksm and being brought here, that i don't know if you actually use the term slam dunk but it was along those lines that we have every confidence that his conviction will be a foregone conclusion. and i thought that that was a little bit interesting because he had yet to go through trial and that there could be a taint issue there. so to worry about there being a taint issue with the hasan case, and labeling it a workplace violence versus an act of terror, i co'tea those too. but if youeo our mmittee that you were not aware, that you are not aware of

mr. mchugh saying that there was an interaction between dod and you on this case, then i guess that is made. >> yeah, i'm just not aware about that. let me just also say with regard to ksm, i never said what it is you said, used the words to that effect. >> somebody did. i just remember hearing that and thinking it was kind of interesting that we were, we were basically patting ourselves on the back that the new york district court was going to have a conviction a minor one and this guy was going down and we had even gone there yet. but that's completely irrelevant to what i'm trying to get at here. could you explain to me what your department protocol is now as a matter of our military which is to send multiple e-mails, attempting to financially support a known

terrorist? so if we're going through this again now, what is your protocol? >> well, i mean, if somebody come if anybody was sending material or doing things that would support a designated terrorist organization, that would potentially violate the material support statute, a case could be brought. >> even if it's somebody intimately? >> i was going to say, the interaction, the justice department and the defense department in that regard is something that went to work out. that's one of the problems we're having a with a military commission, the ability to bring a material support charge and a military setting is not necessary something that is clear, concluded be done. that something that we'll have to work its way through the court. but so, how the case would be handled is something we call to have to work our way through to determine where it is. but i would think in the first instance of an of of the military is doing something that is violative of the law, on the military side as opposed to the civilian side.

>> okay. i want to also make you, bring you back to homeland committee oversight subcommittee that held an investigatory hearing last year that concluded that the fbi's failure, refusal to tell the army about hasan's al qaeda connection led to the fort hood terror attacks. in the audience today, i just want to recognize our sergeant shawn mullins who still has two of hasan's bullets in his body, and sergeant alonzo who hasan shot six times, as well as one of the widows of major nidal hasan act that day. to twant to apologize on behalf of the government for failing you, and the president said when he met t you would be taken care of. and whether or not we get to the bottom of is this an act of

workplace violence or an act of terror, and whether not you are owed your purple heart, just like the people that were killed in the pentagon on 9/11 or not, so that you can be properly treated, is something that i'm going to commit myself to pick and another for chairman will as well which is why we sent a letter. the letter was not meant as any disrespect, but you are a alluded to in the letter. so i have a responsibility, not only to my constituents, but to the people that served on a post that is near and dear to my heart to try to get to the bottom of it. with that, mr. chairman, i, i just want to end with one question, and this is completely hypothetical. you might not be able to answer this, but assuming that calling nidal hasan a terrorist before the trial would, in fact, taint

the trial and make the panel in the court-martial see him adversely, and to go against our judicial principles, so, therefore, we wouldo, we would not call it an act of terror. we would not enttaiivn these guys purple hearts because we are worried about tainting that trial. do you have an opinion if, after the trial nidal hasan is found guilty of these murders, and attempted murders, after he is found guilty, do you have an opinion of whether or not we can label it as an act of terror so the purple hearts can be awarded? do you have an opinion about the? >> let me say with regard to the people you recognize i want to thank them for their service, and they have my sympathy for the losses that they have had to endure. with regard to the questions that you put to me, this is

something that i think is more properly in, on the side of the defense department. you know, history obviously will judge him after the trial. it depends i guess now the trial turns out but with regard to the destination, i think we're talking of something that is a technicality, something very technical that has to do with how the military would make that assessment as opposed to me as attorney general on a disability side. >> okay. i would appreciate it if you can't answer the questions that chairman poste post to you in ts letter, if you could respond in like fashion as you have to the questions that i've proposed. i would just appreciate the answer to this questions as best as you can answer them. mr. chairman, i yield back. >> i appreciate rooney, with the people who, i just found out today y has moved in my district. would the people from fort hood stand? stand, please.

our government has treated them poorly. and what i want as, if this is another thing. mr. attorney general, why should i write you a letter? you should have known this. they are passing in notes left and right on every issue. you would have thought somebody would have told you that someone who serves in congress as you alluded. you have had this letter for a month and a half. and it's an issue of such importance for many women who have served the country. and so maybe justice wasn't -- what i'm going to ask you here, would you send one of your people up this week to sit down with mr. rooney and tell him we weren't involved, there was no involvement, or on the other hand, we were involved in it because you don't seem to know the answer? which is in out and se and sit down with . rooney next week? >> we will certainly look at the letter and we will respond to as

quickly -- >> that we are never getting response. once you get out of here, you are gone. i make him we may never see you again. there will be no response. it's been, but you never respond to the olympic i'm saying would you commit to mr. rooney to se someone up? and i see you whispering back there, back and rth. will you send someone out to meet with mr. rooney next week? yes or no speak with what i said was we will -- >> will you send some and up next week to meet with, meet with mr. rooney? >> i want to look, i don't know. i need to know better, understand -- >> you have enough time. mr. rooney, we are in through next friday but through next friday but can you send someone up to meet with mr. rooney and talk -- >> i don't know if that can be the case but i don't know what it means, i don't know what the nature of this issues. i will have to deal with but we will -- >> that's -- >> we would've the best we can to answer the questions spent i will yield to the gentleman.

>> [inaudible] >> if i say to someone, you know, i'm not a member of the republican party but however, that does not mean you go to the republican party and say, well, what do you have to do with this? when john mchugh says well, i don't know what jess is thinking that jess is thinking to decimate the department of justice. >> i agree. >> so we can't go run off a cliff here on an inference. let's just start there. you have the commander-in-chief who is in a military chain of command and have a military trial going on. the gentleman, mr. rooney was a jag officer. he knows that the commander-in-chief, the president of united states cannot previous close of you on the topic that is, to say it was a terrorist act. while you have a mily tribunal going on. that would be improper. you have a trial going on having to do with this bitteri think dod is completely wrong. they may have taken place at a workplace but obviously this gentleman was involved in a terrorist act.

but this is a military trial. we're talking about the civilian department of justice. we are taking the inference from a former republican member of congress who, anyone of us could call up and say, what did you mean? and they would drive the attorney general in here and demand that he respond to a set of questions he has no involvement with. as far as he knows, right? >> right. >> i think it does a disservice in this matter. we should seriously pursue it with the people who made the decision. dod made this decision. they may have made for very good reasons. that is to further the effective prosecution of the gentleman who did this, number one. and in terms of other matters that might have to, in sequence to a final decision in the court, and maybe the proper way to proceed, even if motions -- emotion or high about the matter. we have a governmental laws we

have to proceed on some rule of law. so i would appreciate everything has been said that there's a reason to believe that when john mchugh made this very interesting statement that he was actually saying that the department of justice -- >> wou t gentleman yield? >> i will speak that was exactly the point in theline tibecaure w an inference made, and maybe you're right, you should've just called me cute directly, but when the inference was made and we were going to have the attorney general testify here today, i think it's important that if there was coronation between dod and the justice department on how this case is going to move forward and i was going to be handled, that it would be fair to ask, ask the attorney general in what capacity in fact that going on. he answered those questions but i think for the people sitting in the back of the rim deserve to lead to get to the bottom of the if you bottom of the if you don't have the answer, don't have the answer to these

questions. and if it's more appropriate in dod, then we will go there next. but the secretary of the army made the comment. i thought it was fair to ask. there's a guy in the back of him that has a bullet that needs to be removed from his body but he can't because under the benefits that he has, it's not termed to be at combat related injury. so he has to wait with a bullet in his body and do what they got what the hell we're doing any but and if you have the answers, yoyou don't have answers, and that's fine. so i'm not trying to be accusatory of anything. i'm just try to figure out why we have the issue, wrkplace en versus an active hair so that these guys can get the benefits that they deserve. if hasan is absolutely found guilty, then can it be determined that it was an act of terror so that they could rightfully get their purple hearts just like to keep a -- >> i would be glad to work with you, get the secretary of the army down here to meet with you so we can get some answers. >> that would be fabulous. >> but i've got to go back to

this bill. i agree with my friend from philadelphia, mr. fattah. but you can come up and say whatever it is. and the department of justice investigated this case. your department investigated this case. the justice department investigated this case. it was not the secretary of the army. you and your department investigated it. so what i'm asking you, mr. attorney general, out of respect for these minimum, 13 lost her life, paid the ultimate price. this young lady here i found out today, what is your name? [inaudible] spent angel. and she just moved to my in gresham district and i will join hands and i will aggressively work. they deserve this. so if you were never involved and no one there, but next week and say, nobody was. but your department investigated the case. i'm asking you on the record, on

behalf of these people who served his country, 13 who gave their life, will you send someone up from e justice department next become an mr. fattah should be there, and i will come and mr. rooney, wants me to come, to say what involvement was, whether you were, not you, whether justice was or was not involved. yes or no? >> we will do the best we can but i say to you, you're asking you to make a pledged -- >> just to come up in meet with him speak what would be the purpose of coming up in force not in a position to share information? i'm saying we wanted to require information. so as i said, i pledge to answer the question in that letter as best we can as quickly -- >> but -- >> we have -- >> the very fact that you will not send someone up to meet with mr. rooney it was a member of the committee -- >> i -- >> who has served in america, who has been down to fort hood,

who is advocating for the family's -- >> i wouldn't commit to doing it by next week because i don't know if -- >> how about in two weeks? >> i will pledge to you -- >> three we? >> we will come up and talk to you, answer the letter -- >> by? >> as soon as we can. spent by the end of may? >> as soon as we can. i'm not going to do any better than that. that's the best i can do. >> i will take, if the american people are watching this and they know their tax osha going to the justice department who can't send someone up, when i look at the ig investigation, the activity that took place with peres and some of his activities, and you can't send someone up, we will send someone down tck them .u we wi try toappear. >> wl yield speak th will not yield on this unable to you because i found that this lady lives in my congressional district and they deserve this but if you can't go by the end of may, it is a real disgrace for this country. i will now yield.

>> i think -- i thank the gentleman fight you. the attorney general has said he will look into this, ma and he will get back expeditiously. it will take time for him to get information to get an answer that you could come in next week and say, i haven't had time to get information you need. we have to coordinate with dod. they would be little point and occupy the attorney general in the midst come in the wake of what's going on in boston and everything else right now, and having him come back on and in the air and. i would rather they can come bacback and give as a substitute education you would do as and as he can. and he is a man of his word and i think that we should accept that the i yield back spent would the gentleman yield? mr. attorney general, could you send out a request to your department and ask, did anyone in the department of justice consult with the department f defense? >> you can rest assured that leaving here today, and probably on the ride back to the justice

department at 19th pennsylvania avenue i will be asking that very question. how long it will take to get, i don't know. i don't want to put myself in a position where, as mr. schiff indicated, that i come up here and have -- i probably can't. i don't want to pledge something that i don't have the ability to confirm that. i don't want to put myself -- >> when you ask questions of your employers, they generally answer very quickly? >> generally. that doesn't mean all the time. >> so certainly by the end of the human know the answer to that question? >> probably, yes. and speeded with mr. wolf -- spent we can probably answer this question very quickly. the only question is time. that's all i was saying speak would you please give the chairman a commitment? >> the answer is yes and i appreciate that and i'm sure that mr. rooney does or we will work out, and mr. rooney, with your permission i think mr. fattah, both of us will,. >> absolutely. thank you, mr. chairman.

>> mr. harris? no. mr. serrano, excuse me. >> thank you, mr. chairman. it's not easy to go back to regular questions after this discussion, but i think the gentleman from florida, mr. rooney, has legitimate heartfelt concerns. but like mr. schiff, i also heard, in spite of the emotions inlved, and ill s i heard a determinationa lot of people to get to the bottom of this to resolve i heard it from the ranking member. i heard it from the chairman. i have heard from mr. rooney. i've heard from the attorney general. and i think wl happen, and whether it's a matter of picking a date or a time, it takes a longer than that and has to be, i don't think it would just go i'm dealt with, if you will, for the next few days.

or months. so i'm satisfied with that. attorney general, first of all, when we say that our prayers go out to the people of boston, and that is true, correct, we want you to know that our prayers and our thoughts are always with law enforcement also, the people that you always see and work with on a daily basis. because how quickly they move is important, but they are also in danger in many ways. so it's a global desire for peace and for understanding, and we commend you for your work and for the work of the department. just picking up very briefly before i make a statement that want to make to you, on the issue of the stop and frisk policy. t.lks yorhat you want to wait t and other places who are looking for the justice department to say something about the stop and

frisk. the purpose of waiting after the trial, the trial itself being made the statement? so at what point, if its the role of the justice department to make a statement on this issue? >> i'm not saying that what we do is depend on what happens to the course of the trial court the results of that trial. it just seems to me that there are data points, information that comes out of the trial that is, as i followed in the newspapers and talk to people about, there's information that comes out that is useful and will help us making our determination as to what our ultimate action will be. but what we do, and the obligations we have are independent of what happens in that trial. >> thank you. just very briefly also, we understand that there's a long overdue pilot program for immigration review which deals with the possibility of helping

children who are in the system. and as we deal with comprehensive immigration reform, there are a lot of pieces there that folks will get to know. one of the things that happens is what happens to people are in the system over to, deportation, children that are being left behind, parents are being deported. what do you see as the future and the resources alable r that kind of a program to protect children as we move to protect other children such as the dream act children? >> i think that that's, i think that's something that we need to do, we try, while i was attorney general, to look at situations where people find themselves in the immigration system and to extend to the extent that we can the right to counsel so that people in what are really kind of potentially life-changing decisions, that they are adequately represented. and we believe, we have a $4 million enhancement that we

think will assist us in making sure that children do not face these kinds of proceedings alone. so i think the concern that you have raised is a very legitimate one. we have focused a lot on children's issues since i have been attorney general, and as we are looking at reforming, redoing our immigration system i think we really have to look at a way that we've not before, who comes into the system and how they are being treated. and adequate representation is i think the cornerstone to any adequate, away to a good syste. >> thank you. mr. attorney general, i want to make basically a statement and if you wish to comment o iti would appreciate it but i understand if you can't comment8 puto rico became part if you will of the united states. in 1917 puerto ricans were made american citizen. in 1990, for what it's worth i

became a member of congress to and since that time, and prior to that time when i -- are you equating each of those things? >> i said for what it's worth. [laughter] so i'm not equating this. but there was a direct result obviously of all those things happening. and all the time that you been attorney general, even before that, you know my concerned. so we just wanted to thank the department for including $2.5 million in funding to conduct voter education to help resolve puerto rico's future relationship with the united states. this funding is an important step to me and to millions of puerto ricans in puerto rico and in the 50 states into finding a process that will allow puerto rico to truly determine the constitutional relationship that they want to live with the united states. this language is an important response to a valid question that was on the ballot last november in puerto rico, whether the people of puerto rico wanted to remain in their current

status or to change to something different. puerto rican people on that date clearly voted for change. this funding is a logical next i don't have the depatment planto enter but its responsibilities as it moves forward through isprocess, but se that you have a supporter on this initiative and this committee to of our spo to the chair of the fcoittee. the chairman of the subcommittee, and i think after 115 years it is time to resolve the political status of puerto rico. it's of great interest as i said to the 4 million who live on the island and to the four plus million who live throughout the 50 states. and if you care to comment on what the process will be, and what you hope to a college at the end, i would appreciate it. >> under the budget request of $2.5 million the respondent was is going to rest as it should with the state election commission to our role is limited to reviewing the plan and determine whether it is compatible with the constitution

and laws of the united states. but the administration has committed to the principle that political status is a matter of self-determination. and the president's budget proposal reflects his commitment to work with congress to provide a mechanism for the people of puerto rico to decide their own fate. >> well, we thank you. we thank you for the comment, mr. attorney general, and we hope we can work together as a nation, if you will, to resolve this issue. and once again i thank you for your service. thank you, mr. chairman. >> dr. harrison? >> thank you very much. and thank you for appearing this afternoon. i have just two brief areas of questions and then i'm going to dive a little bit deeper in the medical marijuana issue. i wasn't going to ask this one until i read "the wall street journal" read "the wall street journal" this one where as the department is the subject of an article and lead editorial discussion. about but i'm going

ask you, do you agree that the quid pro quo deal that was arranged and that is an appropriate ethical way to deal with those cases? to have involvement in the decision of the program is of that quid pro quo deal? >> the use of the term great quote quote -- quid pro quo, pure technical way. i think there is there evidence that the decision was made to drop the support for the two other cases of return for the drop prosecution, for the dropped magner and vulgar i think there's an agreement that that was done. and my understanding is ethics was consulted. do you agree with that? >> i think the actions that in the state took in a case where appropriate and in the best interest of the people, the taxpayers of our country, the citizens of this country. and as you point out i think something that is very important. ethics, people were contacted,

the office of professional responsibility was actually contacted as well. i didn't see the hearing today, but i'm sure that the secretary of labor designee indicated the same. >> let me just ask him and just to follow-up very briefly on that. because although everything was appropriate, it appeared there may have been actions to make i rver obvious to the obse that this was what was going on with regards to e-mails that said though connect those two, it's an official communication to and what's more troubling him a specific question is this questionable use of a personal wi aldattorney in st. paul by mr. peres. because we have had the epa administrator, he used a dog named for him in a system that i was the chairman of the subcommittee, was looking into some of these issues and we did note to subpoena the dog's e-mail so we weren't getting answers back. it appears that it personal

e-mail account was used for communication between mr. peres and the attorney in st. paul. but the interesting thing is that it was a subpoena issued by the oversight committee i understand that a justice department spokesman's quote was we have been cooperating and will continue to cooperate with legitimate oversight requests. .. can be reviewed and determinations made about them. >> so you are feeling that the

subpoena was not a legitimate ovsigh request. the subpoena that the oversight committee s was not complied with. he said the information was provided for personal e-mail information was provided as to the witness's testimony then what was reported today was incorrect and is not complying with that request and that is appropriate for that request. >> the personal e-mail information was provided yesterday. >> was provided yesterday. thank you. i appreciate that answer. let's talk about the nxt system because i'm going to file a -- we followed a little of what he brought up because as we expand

the system i know the president used very strong language coming used the word mauney you can disagree with someone's positions inefficacy but i'm a little worried because some of the things the were said about the next system i'm going to delve into it because before we can expand the system in general i would like to ask the question is the current question effective and is it enforced. in terms of effectiveness, you are aware the last i have from 2011i will ask to get the most updated figures now. there are 61 records in theve f6 people with mental health and only 61 people in the state of maryland rejected under the inquiry in 2011. so that means a person -- and i've been in the phrase we have

more than five felons that means only 61 people will be denied going into a store today picking up a military rifle off the rack, standard issue world war to a military rifle off the rack, call the background check and be denied because there are only 61 records in the whole system. is that an effective system? do the people of maryland -- we should just be expending a system and the censorship brought up and you realize 33 states have no entries for drug abuse, zero entries for drug abuse for the mental health disqualifications which was the only thing that would have prevented some of these tragedies. what i'm getting at has to do with appropriations. we spend hundreds of millions of dollars in the programs. hundreds of millions of dollars in the gransta going to the states to get the data in the

system. by the testimony i couldn't enjoy it out in the written testimony appears you may have asked for more money than that next year. we've spent hundreds of millions of dollars we don't have a system where states are reporting things. we are going to present to the american people this hope that we just expanded the world will be great but in fact the system is full tolls. it has a lot of false. all i'm going to ask you is please address those glaring problems and make the state's follow-up. maryland has taken that money, 61 cases, $10 million the past years to report 61 cases. i could get more cases reported walking through the jesup prison and take the names of the felons. i can get more in one day. but let me talk about

enforcement because mr. attorney general in the year 2010, the year that we had extensive records, 76,000 denials and you know these figures. 43,000 were felons, 14,000 fugitives. there were 14 convictions. 62 were referred to charges. 62 out of 76,000 miles and a denial means someone claimed they could buy a firearm but they couldn't and therefore committing a federal crime doing it. 62 charges referred. 13 convictions, eight in indiana. so you probably have some prosecutors in indiana who didn't get the feeling from the department that you're not supposed to prosecute these cases. the ig from the department

indicated his impression is it is low priority in the department. u.s. attorneys just don't prosecute people who file late for background check wall. please tell me that's not coming from the department that you want to prosecute every one of those 13,000 fugitives who had the nerve to go and attempt to buy a gun as a fugitive from justice got turned down and was never prosecuted. tell me that's not the official department policy. >> you put a lot into that question. since the system started, 2 million people have been turned away who tried to buy a gun and came into conflict in the next system. the system lighting should have been expanded in the vote that was taken yesterday and needs to be made better which is one of the reasons we have the budget

request money so that we could find ways. the information provided in the states is inadequate and we need to take steps to try to remedy that situation. there's no question the system is designed that technically works and the question i have for the opponent it is a system that needs to be made better. why then would you not expand it to the gun shows and people that by the internet. that question has never been adequately answered. the role of the prosecution is the justice department are done prosecution's. we brought a ol of 85,000 cases last year. there were 83,000 denial's last

year. we have to be judicious and how we use our resources. we can't prosecute denied again. we have to make the determinations and focus on those people who are most dangerous people that get a weapon in appropriately most likely to do something bad, harmful with that. there are only 62 charges referred, 62 people that were dangerous enough if they got a weapon -- your department makes all these determinations of referring charges. all is in your department. there were only 62 dangerous enough.

we save 2 million. we kept the guns out of the hands of too many dangerous people. but the fact is we denied 76,000 but you're going to have to tell me did we only refer 62 because they were the only dangerous ones or did we refer 62 because it's just not a priority? the testimony was we are going to refer the ones that are dangerous. only 62 in a year. they were denied the guns. the system does work those people didn't get guns so that is part number one. >> what the gentleman answer the question, please. >> i feel we ought to agree on that this system isff in the sensethawhat i call part one peopleho shouldn't get guns don't e them and try to

get guns and then are not prosecuted. the members want to be a little high year. if you have 62 and look at 76,000 i'm not sure the number that you use that seems like a glaring difference but you have to understand what a paper violations for everybody denied wasn't dangerous there are a bunch of reasons. >> and that's exactly my point. that we say we kept guns out of the hands of 2 million people could i want to move on because -- >> if they had gotten guns undoubtedly they would have done things that were harmful -- >> but not bad enough to prosecute. >> look i'm a physician and if i tell people the license i felt for 30 years because the federal government is being under the control substance act that is so

important to control that for the health of people in the united states that we are going to create the dea and enforce those laws so we have the administrator and you heard the questioning earlier the administrator is pretty clear that the evidence that drugs are dangerous especially for children that lead to permanent ges in iq. the mental clearly increases and they are dangerous the president did not say that he was for legalizing marijuana. but more importantly, the president didn't say he was against so here you have the dea under the schedule one drug, no medical use, clearly illegal and the president not taking the position against what happened in washington and happened in

colorado, and my specific question is because the supremacy clause it's clear from the case law you couldn't overturned the local law and state law under medical marijuana but we've crossed the threshold and washington and colorado crossed the threshold that actually was pretty clear in a couple of the cases and couple of the rulings there is a possibility. the justice department agreed that marijuana is dangerous. your department could choose to overturn laws under the obstacle element of the conflict preemption they could choose to attempt to overturn a clear message to the states we are going to draw the line of

medical marijuana and maybe there are some cases we are going to send a message to america's youth that marijuana is not a safe drug. it is illegal. we are going to send that nussle message -- national message. is that possible? among the realm of possibilities in the consideration to draw that line and send a clear message and we will have a message fairly -- i guess it isn't a clear message to the american kids. i don't know if it's a bad, i don't know if i'm against that. i have you plus the president. add them all together i have as many kids need clear messages

and i'm afraid we are not sending them one. would that send a message that is something to consider taking the statest ourt say we are going to ask for a ruling in the federal court on whether we preempttsatlaw >> that is something we hav under view a a number of ornt through before that have to make the determination. >> can you be a little more specific? we've em lhad thok at this and at least two reports and it's been six months since november it has occurred. the programs are gearing up in the two states. do you agree an argument can be made for preemption for conflict preemption under the obstacle element that a line was crossed

and the states are and distinction to the bsa. >> to at least part of the statutes. these are the things we have to take into consideration. what kind of case can we bring, the strength of the case in our ability to try to apply to the to tell the of the statutes those are the kind of things that have to go into the determination that we will ultimately make. >> who is going to make that? >> i will be making the determination i believe. >> discourage marijuana is a gatewayg an w are sending a mixedmessa. ument.ehash the time can you give me a general idea when the decision is going to be

made. >> when it comes to protecting children making sure they don't die, when it comes to drug use or anything else, i'm proud of what this department of justice has done over the last four and a half years we have put front and center the welfare of our children. it's something i've been personally committed to. so the decision that we make will be consistent with the policies that we have put in place with regard to the welfare of our children there will be no tension in that regard. i am confident of that. >> what is the timeframe for the decision? what will be done about the federal preemption question over washington andloo's that are inr contradiction. >> we are going to make that decision as quickly as we can.

>> can you be any more specific to that? fall, winter? since the answer is no, mr. chairman, just for another minute because then i have to ask wha e yourla to enforce law in those states while you are deciding whether to go to court and struck down block under the federal preemption the csa in those states. >> the efforts remain the same as they always have been. there are policy guides that we've given the u.s. attorneys from i guess two deputy attorney generals who served under me with regard to how we use justice department resources. >> you are referring to the memorandums. you know they refer to medical marijuana. you are aware of that? islamic let the gentleman answer. >> you can learn from the

memorandum of the justice department policy is with regards to how resources ought to be used in the field. there are things that are more generic to go beyond the parameters of the medical marijuana guidance. you can glean from those memos it is pretty clear. >> what about the officials who now under the question of authorizing activity instead of just approving activity of the statutes are obtaining information do you intend to pursue action against officials that authorize it? because that wasn't covered in the memoranda. >> we are looking at a new set of initiatives statutes that have been passed by the states and those determinations hav hat e made by us. >> i appreciate that. i think he's been at every

hearing. i enjoyed the fact he was concerned about the president's language yesterday and the relationship to lobbying he thought was exceptional language. maybe he wasn't on the florida house when we had a member of the congress on the republican side of the aisle in the state of the union address the sensitivities didn't a ride in some kind of selective amnesia in one instance but not in another. if we want stability we have to practice it. i want to make the point since the president's executive orders have over two and a half million new names have been added just in recent weeks to the system in my own state 600,000 names have been withheld these are people with mental health records that

should have been in the system but the republican governor and i it wasn't compliant and they decided to tese over and it's important to show progress eing made to get the names into the system. when you have 600,000 people who shouldn't be able to buy a gun having them in the system might be useful but i do want to deal with another part of the question. he seems to suggest every time someone is denied the committed a crime the should be prosecuted and i don't believe the fact is if i've been involuntarily sent to a mental health institution, and i sure that many of my constituents think on some days i should be that doesn't mean if i go to buy a gun and i denied i've committed a crime. the provision is against the gun cellar from selling to a person who's in a restricted category. is that correct?

>> there are categories that are different but in the mental health category. >> there are a number of ways that can be viewed. and even for those people that actually technically connect, and it can be hell are we going to ask the resources that we have? as i said, 83,000 denials and a total of 85,000 prosecutions in the last fiscal year i believe we can't do all of them so we have to make the determination which is not to say that the concern the doctor has raised isn't inappropriate but the number of prosecutions and that is something -- >> when you talk about a domestic violence perpetrator who is going to buy a gun and that information should be passed along for the local authorities immediately because they may not find a federal license on the gun dealer and we may have a sense of what the outcome may be if they are not

stopped and that so i think that more can be done. one of the executive orders is to have more done in that regard. >> one of the things we ask for is the federal trafficking statute for people who are going and buying guns with the intention of getting them and transmitting them to somebody who inappropriately gets them shouldn't possess them, that apparently is and as i understand it not going to happen as well. >> but it's unfortunate because the bipartisan support in the house for the trafficking law and we should do something about. but unfortunately our political process doesn't seem to be a riding of the constituencies yet that we want to provide -- protect the public from people who shouldn't have guns. succumb to the background check is the policing of the people of the people who were always saying we need to make sure the wrong people don't get guns as opposed to tbc check.

i would conclude quickly and i know that you have to depart. i want to thank you for your leadership and the mentoring effort in the nation in support the boys and calls club of america. they've gotten a great deal of support and leadership from you. the white house indicated her one of its statistics they have at least 10 million more young people who need to be connected to a legitimate mentoring effort and that's the most important thing i think we can do as a country. i think was the boys who once said the minute is a crime committed for the community they should turn the away from punishing a criminal to make sure other young people don't follow in that path and i think we have missed that point as a country that we have spent so much focus on those on the

planned utter crashing rather than the ones we want to land. i appreciate leadership for the department and the chairman for his diligence. members get a chance to get to the point and i appreciate it. >> thank you. i have 70 questions i'm not going to ask because out of respect and is prepared to stay until 6:30 at night. what i would ask and i would ak for some time to sort of answer these estions in writing. >> the 91 questions? again i don't know the questions are. >> they are just budget questions. when can we expect a response? >> i don't know.

>> forget it, forget it, forget it. i will submit them to you. we did the investigation of the civil rights division has questions with regards to that. i think if it had in a failure with regard to the prison industries you were a failure with regard to prison rates. senator kennedy, bobby scott. during their time, if you aren't going to answer the questions it's interesting you want us to reprogram the money. why are you oing to reprogram that money for the attorney

general? i'm going to do it because i want to be helpful to the bureau prisons. i want to do what's right. i don't want to be like some other people. now i'm going to be coming back and asking for others and i'm going to try to help you because you took money from the fbi that is now doing very critical work to get to the system. now other agencies -- i'm not going to pay any attention to you because your position with regards to the budget if you can't answer the question as you come up here you are going to stay for the whole time we are not going to pay any attention today. >> mr. chairman and if you want me to stay i will stay. if you want to ask more questions, let's go. >> then we will get the whole group then. >> what time did he say he had

to leave? >> it is an important meeting but if you want me to stay i will stay. >> it's the boston issue, is that correct? that's an important issue and i don't want you to miss it. the hearing is adjourned. >> you said some things that i think are unfair to the civil rights division, and a lot of what the inspector general found in the civil rights division preceded my time as attorney general. we have taken steps to deal with the issues that were identified their. and with regard to the whole question of the industry is, i've done as much as i could. i've been supportive of that and try to work with you in that regard. that's consistent with the approach that we need to do something for the people who are in our prisons we can't just warehouse them. i'm proud of what we've done.

the department that we have now is fundamentally different from the department that i found when i got there to be we don't hire people on the basis of political orientation and we don't do things as we've done in the previous administration. we don't write memos that say that torture is appropriate when dealing with interrogation techniques. i am very proud of my time as attorney general and men and women who served under me. >> it took you years. the bureau of prisons we've asked them to bring programs with regard to work. a document that harassment and other unprofessional behav ininnd personal eralcks. quote reflects lack of pr iosed period time during the last

administration and yours and it caused various facets to the operation. that was the word to use >> work needs to be done and we are in the process. >> are you going to bring an outside group as you asked we bring you in for an attorney general for others to look at that? with regard we did go beyond the time period given in the same way the congress went beyond the time frame that is given. so we did the right thing. we came out with regulations that are effective. we didn't come up with something the was half-baked. we took the time what was put in place on a permanent basis. >> congress took along. what do you mean by that? >> there were time frames that were in place before we got the

measures that were blown to but we took the time we needed. >> the language was drafted by senator kennedy and congressman scott and senator sessions and myself. it will be a very god thing. >> we have done the right thing when it comes to that. thank you.

>> [inaudible conversations] [inaudible conversations]

as you know by now it is unfolding in the boston area as the marathon bombing investigation continues. overnight the first of two suspects both brothers were killed in a gunfight, the suspect you see there on your screen the older of the two brothers with law enforcement officials and the second suspect was seen on surveillance videos with a white baseball cap still at large at this hour. the manhunt ongoing in watertown as the suburb of boston we of course will continue to monitor those events and bring you updates and briefings as pnc's been continue to cover the reaction of policymakers from washington. in fact at this hour attorney general eric holder fbi director miller briefing the president. we also expect a press briefing with white house spokesman jay carney and we think reporters will be asking about the boston

situation and we will have live coverage of that at 12 eastern over on c-span. >> i strongly urge you to come up with a number that tells this committee and the american people we have a responsibility as well and for you to say we are just going to see how things turn out and it will determine the size of the 2014 force that i believe this is tragic and terrible mistake for which we may pay a very heavy price. >> senator, can i comment on that? >> i dn't say to leave it completely. we are advising and assisting at eattalion level and we are going to lift off the brigade level this fall. the number is inextricably linked to the level that we believe we need to provide. >> you have to wait until 2014 to determine that? >> we do not. what we suggested is that the afghans first summer in the

lead. i believe this summer will be the bellwether for afghan performance in 2014 and beyond.

usps officials appeared before the house oversight committee on wednesday to testify about their fiscal problems and ask congress once again to allow them to drop sat. deliveries which congress has blocked them from doing. the first panel is a little over two hours. >> the committee will come to

order had to fundamental principles. first americans have a right to know the money washington takes from them as well spent and might say. second, americans deserve an effective government that works for them. our duty on the oversight reform committee is to protect these rights. our responsibilities to hold the government accountable to tax payers because taxpayers have the right to know what they get from their government. our job is to work tirelessly in partnership with citizen watchdogs to deliver the fact the american people could bring genuine reform to the federal bureaucracy. we have two panels first the general accountabilityfrs to charteinsolvency, theire tuatin thest office. i see that today's hearing said insolvency. i say so because there is no

such thing as bankruptcy of a federal entity. the post office also required to be solvent, required to be self funding is in fact neither self funding or solvent. the postmaster reported in the neighborhood of $16 billion of losses last year although there is controversy over the so-called refunding against the inevitable health care requirements and retirement by postal workers that 11 billion dollar de fault the fact is in the real world by any standard the post office is bleeding red ink. they are doing so not because the postmaster general has failed to propose changes, not because the gao will not testify these changes are material and not because the cbo has failed

to score what these savings will be. not because some of those savings have been statutory lee possible since the 70's. not because the american people failed to support these meaningful changes by the clear majorities of each category, and i want to reiterate the majority of americans see this as not essentials. the majority of americans are perfectly happy going to a cluster box, a corner box or lock box near their home to get their mail some of them get it in the shade of a greater cost oflabor by far. it isonderful and convenient t ly post office.

again and again the legislature is heralded buy almost every newspaper in america. it is supported by the business community. but behind the scenes, lobbying continues to make it impossible. recently the postmaster announced that he would in fact to go to a new that would provide different service. legal opinions varied but he certainly had a right to try to be challenged. he had other avenues. he was supported by the president who called for both of last year's budget and this year's budget. they ducked under the pressure of an nfl ball lawsuit and he backed down because in fact the postal unions do not want to have these reforms at this time because it will reduce their

revenue. that is the problem we are here to talk about today its insolvency. they said it can be made and to support legislation that would allow further changes. i want to thank everyone for being here. i will split my time with the chairman of the sbcoitt the gentleman is recognized for the rest of my time. >> thank you for allowing me the time to give this opening statement. the postal service is an institution founded in the constitution. before the age of internet and sell phones it was the keynote of communication between loved ones separated by distances and between business and their customers and with the government. we live in a different time today than when benjamin franklin was postmaster general. today's hearing is about the way the postal service can modernize, work harder and work

smarter and prepare for the future. while in a strong proponent of the benefits of the internet, the loss of business to e-mail and electronic bill payment is a problem in the postal service. we need an infrastructure in the country for moving matter, not just bits of data for the post office it isn't just about cutting cost of finding innovative solutions the will bring the usps back from the brink of financial collapse and make it stronger for the future. there is no doubt the postal service is a need of reform even without the pre-funding requirement which ensure we will hear a lot about today, the postal service is losing roughly $5 billion a year. to start off the conversation on the reform in the 113th congress i chaired a hearing on the oversight committee on the federal work force postal service since last week that focused on the postal service customers and what they need. edni elementary business tls you when business is struggling, the first thing they should do to will hear more from the postal side on how they can become more efficient 20th

century providers. my concern is the government watchdog and as a taxpayer without reform the america op a going to be footing the bill for the taxpayer bailout. that is e last thing that we need right now. i agree with the postal service plan to modernize the saturday delivery as did nearly 70% of americans. as fortunately the board of governors has decided not to pursue this common sense cost measure. the postal service reversal on this calls into question their ability to move forward with desperately needed reforms. i truly believe they're smart ways the service can lower its cost and its service and bring them to light. thank you very much. >> we now recognize the ranking member in his opening statement. >> thank you mr. chairman. i'm grateful to you for want to thank you for agreeingi to my request to invite the president of the national association of the letter carriers to be a part of this

hearing. the lever is the foundation on which our postal service is built coming and we must honor the employees who served this institution for decades. their essential partners at the reform efforts. delivering mail to more than 150 million addresses operating 32,000 post offices nationwide, the postal service remains a vital link the mind is the great nation together. last year however the postal service reported losses of approximately $16 billion lost $1.3 billion in the most recent quarter. ladies and gentlemen, this is simply unacceptable. it continues to lose approximately $25 million a day, and it has borrowed all of the

$15 billion it has authorized to borrow from the treasury. it is a pivotal to the burden of the postal service faces and refunding its health cost. it's on any other agency or business in the country if taken steps to reduce the cost and putting offering buyouts to employees reducing operating hours of thousands of post offices and dozens of mail processing centers.o hang onto u ha by trying hanon toe whatyo who be.

things are changing and the posterviceas to change. in january the postal service board of governors directed the postal service to eliminate the delivery of all saturday mail packages. this change effectively would have ended the six day delivery. every appropriations measure enacted since 1984 has concluded requiring the six day mail delivery. it states that the six day delivery. it prohibits the changes ordered by the board of governors. let me be clear no matter what my position might be on five or six day, i can tell you that the postmaster would catch hell if

he went against what the congress voted for. we voted for that. so is your postmaster, i can understand the problems the would come when you have the congress saying you do one thing and do another and do something else to fund the government for the remainder of the fiscal year 2013. as a result they have delayed implementation until congress passes legislation authorizing such a change. again this is the converse that did this, we did this, not the postmaster, we did. as i said repeatedly, conagra's needs to pass comprehensive reform legislation that addresses not only delivery standards but to reengineer the postal service for the next

century. we'll be talking of the postal service by using specific characteristics and provide key tools to right size the postal service work force. as i proposed in my enervate to deliver act, we should also create a new chief innovation officer position in the postal service. too many people argue the postal service should be self sustaining like a business while at the same time arguing it should be banned from competing against the private sector. i believe we must allow the postal service to expand into new business lines and my bill would do just that. unfortunately the most significant challenge facing the postal service hat it has been t two years. congress' failure to act. we've god somethg although the senate passed a

partisbil during last congress, the house failed to consid the legislaton whatsoever. last fall the house dse tgethero negotiate a serious and a sustained ma. we do not resolve the bill but as i stated when the chairan objectified before the homeland security and government affairs committee i belie we can quickly finalize legislation that cuts the postal service on the path to sustainable financial future. this legislation is urgently needed and we should begin work on it immediately and i sure we will. i want to thank you for holding this hearing. it is a very important hearing and i look forward to hearing. >> thank you the gentleman. i would like to swear in the panel at this time since they appear to be present to we have the first and the second panel

and swear you in together we won't have to do it twice. postmaster if you will step up and also please rise. we've got to be efficient in the committee that demand see efficiency. please raise your right hand. do you solemnly swear that the testimony you are about to give will be the truth, the whole truth and nothing but the truth? let the record reflect both the first and second panels answered in the affirmative and please take your seats. mr. james bilbray member of the board of governors is effectively on the first panel for health reasons he was not te interview. so i'e dispersed his questions and answers on the record and

will be available on the day as you use it as voted live testimony. however, it wouldn't be placed in the record officially, and this is almost for the press to understand until mr. bilbray signs it. this is an oddity although he did it yesterday we have to give time to review it for purposes of being a witness you normally don't get to revise and extend every answer so we are going to treat it as much as we can as a live witness specific questions and answers used those will be in the record and of course will be subject to any additional signature with any additional remarks he makes that a clarify its that is the best way to have the record at least several days from now to be thorough and complete. >> is it my understanding mr. bilbray for clarification mr. bilbray did say that he is willing to come at a later date. >> he was willing to come at the

next board of governors meeting but he was also willing to do in advance of this a live interview. the law gave interview was a bipartisan and really i think reflected what we wanted to d was have the information as clrly on time as possible so we are appreciative that he adjustedhe hedule and did i yesterda there will not be the need for him to come back separately. i did that his testony pairs well with mr. burnett and bilbray as the vice chair. >> i want to make sure that in fairness to him he did volunteer. >> the accommodation, he was accommodating both by offering to come at an alternate date or in spite of some health problems that he's having he was able to do it yesterday. so that's why to be honest he beat you to the testimony by a whole day. with that, we now recognize the honorable jean dodaro for his

opening statement. >> thank you comer ranking member mr. cummings and members of the committee. i'm very pleased to be here today to talk about the postal service financial condition. the postal service financial condition has been on our high risk list since 2009. the situation is by year. in the last five years the postal service has added $10 billion to its debt through the treasury reaching the 15 billion-dollar debt limit, declining vos ha might generate the revenues necessary to meet expenses and financl obligations of the postal service and unfunded benefit liabilities now stand at $96 billion as a percentage of revenues they've grown from 83% of revenues in 2007 to 147% of revenues in 2012.

looking ahead, the postal service projects that first-class mail which is one of the product they have will continue to decline in volume 32020. also, they've pointed out that they have severe liquidity problems right now and have challenges in making the capitol and investments in their delivery fleet which many of the vehicles are approaching the end of their useful lives. the postal service needs to act and the congress needs to act in order to address the situation. we've recommended a comprehensive legislative package to be passed from the postal service stand point where we think what they need to do is continue to reduce their cost. the need to continue tl t

their delivery and processing structure. they need to reduce their workforce. 80% of their total costs of our work force related costs. they need to reexamine the benefits paid to the work force and a compassionate and a thorough manner. the postal service also needs to reexamine products that are not covering their cost. periodicals, for example, on the standard flat mail in terms of catalogs have not cover their costs last year in 2012 by $1.5 billion. so the need to make some adjustments. we need to be done in the price caps that currently exist. and also as the postal service has done, the need to continue to look for new revenue sources as well. with regard to the congress as part of the legislative comprehensive package, there are at least three things i would point out in my opening

statement that it should address. one, it needs to modify the prepayment of the post-retirement health care costs and in a fiscally responsible manner. it's very important that would be dealt wi in that way sothatthe sts ar n de rred dth particularly in thelight of the deine in mail volume that poured tens of revenue challenges going forward. second, the congress should modify the collective bargaining agreement statutes to require that the postal service financial condition would be considered and binding arbitration. it's been 40 years since the legislation has been passed and it was at a time the postal service was in a different competitive position at that time. so we think it needs to be modernized and we think the requirement that the financial condition to be considered is a part of binding arbitration

would be helpful in add dressing the situation. last, and perhaps not inconsequential the, the most important thing in my opinion is that the congress give the postal service the flexibility both in pricing and delivery methods in order to react to changes in the marketplace and declining mail volume. its biggest competition is technology. technology is changing rapidly and the postal service is not able to make those changes in a very nimble and quick fashion. so we believe these are the type of changes that ought to be y theongress, and it's very important for the gislatcosequences both for the postal service, the american people and the finances of that entity as well since thank you. i am happy to entertain questions at the appropriate

time. >> good morning, chairman, ranking member cummings and members of the committee. i serve as the chairman of the board of governors of the united states postal service. i honored to be asked to testify and thank you for inviting me today. the postal service plays an incredible role in the american economy it provides a national platform that every business and president relies on in the directly supports and 800 billion-dollar manning industry that employs 8 million people. america needs a financially healthy postal service. it needs a service that can adapt to changes and technology and the habits of american consumers. it needs a postal service that inspires confidence in the future. today the postal service faces tremendous financial challenge its ss model is not flexible and the future

we lack the authority t fulfil our responsibilities to the great nation. unfortately bill all that controls the actions do not provthoryo t flexibility for it to continue as a self sustaining organization. we simply lack the tools under the law to solve the problems we face. if we are giving authority and the flexibility to quickly address our problems, we will do so. the board is directed to the management of the postal service exports and act upon every opportunity to generate new revenue and reduce cost. postmaster general donahue and his team have pursued these opportunities aggressively. the achieved tremendous results that they are limited in the actions they can pursue. the board supports the five-year business plan developed by postal management to read its irresponsible plan that will

close our large and growing budget gap. we believe it provides the only realistic road map to long-term financial stability. i know this morning we will be discussing our national delivery schedule. based on the chairman and vice-chairman's opening statements, there are differing opinions about the rules will passed by congress. last week the board acted upon legal guidance that says the recently passed continuing resolution prevents changes to our delivery schedule. it is a roadblock that stands in the way of a financially re to reduce approximately $2 billion in ort k many others. i look forward to discussing this issue and the authority that we need under the law to implement our plan. the board of governors is eager to support the committee to pass

comprehensive postal reform legislation. we would be pleased to help in any way we can. thank you for the opportunity to testify this concludes the remarks. >> thank you. i will recognize myself for a first round of questioning. you went through what the postmaster should do, and he's done a lot. of a six day delivery you've looked at the legal opinion. does in your opinion of the legal opinion have a path of suggestions if even though it questions whether this alternative is legal does it have a path of the alternatives that could be pursued. >> with our legal opinion did address and what it didn't address. the position that was in the

e ngrefirst halfution passed by of the fiscal year. what is the rationale by the postal service for saying the provisions didn't apply there was an appropriation attached to the provision in the first six months. the provision didn't apply. you can ask for the president to ask for the revision of the 100-dollar piece of appropriation that creates a legitimacy for the writer and how you can plan october 1st city of two ways to go to five day.

they can say 2 billion but in the alternative simply announce october 1st isn't a writer they will be doing five days. didn't the legal opinions a boat in both cases so they could do that? >> we held an opinion that that wasn't tied to the appropriation of funds. >> you disagree with the opinion of which the postmaster made his decision not to go to five days? >> that's correct. >> you have read the legal op i will mention m. apparently had not because he didn't see in our interviews with him to understand the nuances of the alternatives. did you look in the last pages of the legal opinion of which the board acted at the two alternatives that were very clear don't take the money in the future or ask for a rescission to get to the end of the year both of those in the legal opinion. >> they were, mr. chairman.

>> and i believe the legal opinion is in the record already. i will ask unanimous consent that it would be in the record without objection so ordered. >> one of the things i wanted to get out from mr. bilbray is he was asked have you or any other board members received direct pressure to your knowledge of trying to exert pressure to protect a specific mail processing plant. and certainly had one call that was senator reid called me about the processing center. did he ask that you close that, he did. isn't there a pattern of pressure on all of you governors and on the postmaster from the u.s. senators to protect processing centers that have been deemed to be excess and

waste all? and perhaps some housemembe, too. >> mr. chairman, it is true that we are contacted by senators or representatives and one of the event as being from a mexico without any processing centers i have not received any such calls. generally speaking, the board has very little political pressure. we have received one letter on the six-day closing from the publishers clearing house that the only letter that i received from the governor in regard -- >> isn't it true that the publisher's clearing house ships at a low rate such that they are part of that group that doesn't cover their own cost? >> that would be correct. >> no pressure either. >> we will get to the postmaster in imminent, and i will get to the political stuff but i want

to be very quick. the nature of this legislation not going through, there is a piece of language in the 2006 bill that i want both of you to answer to the extent that you can under the exigent circumstances according to the law, there are a number of things a postmaster can do and the board of governors can do if they are a dire situation, exigent didier, is all that they all seem to be pretty similar to me includingraising the postal rates to cover that billion and a half dollars that you mentioned. isn't it true they have the authority of the are willing to trigger the fact when you lose 16 billion in revenue, that exigent circumstances to trigger things to save money or to gain revenue. >> i'm aware of the provision but we haven't really looked at

it to know the full extent of its that it can occur under the circumstances that you mentioned so that those decisions would have to be balanced against the potential volume might decline as a result of the raises and the rates so i would be happy to provide the detailed answer for the record, mr. chairman. >> as i ask you to answer the same question i might mention line from the consumer electronics industry years ago. we understand if you lose money on every sale in order to make it out the volume. increaeicuwer whether or not losing volume on something you are losing money on how would you address that. >> we've had numerous board discussions on this in the seven years i've been on the board we have discussed the rate case is that many of the board meetings.

again still lost three rate increases based primarily on the i'm more concerned about the loss of all human than i am increasing revenue our infrastructure depends on volume and if we raise prices be of great concern is on the board they might be further limiting further deficits. we have directed after our last board meeting last week that management look at every other option available once we made the vote to not go to the five day delivery on august 5th. we ask that they look at everything else available to us which would be to reopen the labor negotiations, to look at the filing of the rate case and then accelerate if possible thee

procsi plants asickly as we can expeditiously deutsch. >> i recognize the ranking member. >> let's not kid ourselves, mr. dodaro. if the congress says will you to do something a certain way and the postmaster came back and said no i'm doing it my way the postmaster would catch hell i'm telling you everybody appear knows that and everybody knows that. so he was caught in a hell of a bond. and i want to go back to something that mr. bilbray said in his testimony so we can be very clear so i quote from his trends could and he said what me

tell you this is a tough job we have to deal with a lot of bureaucracy in the administration the regulatory commission and congress and they are all our bosses and they try to do the best that we can but we are really restrict on what we can do when we can do it and like i say it ain't just as bad as everybody else out there and they understand them totally and i wish i served on the board of governors before i went to congress i would have been a lot better congressman in dealing with the post office. >> let me go back to you, mr. dodaro. does the gao believe that the six-day writer apply even if no

money is appropriate? >> yes. congress has the ability to give operational guidance through the appropriations and yes that is what our legal opinion held. >> does that mean -- does that mean that the postmaster did the right thing consistent with that opinion or he did the wrong thing? >> ct wiyout just said. >> i think initially the decision by the postmaster general to go forward on the provision and then what happened? >> we haven't looked at the issue since then. >> i would like to ask about the postal service position. is the board of governor given a

routine update of the postal service's financial condition? >> we are. >> for the year ending september 30 if, the postal service wrote in its financial statement, and i quote, although our cost reduction and revenue generation initiatives are expected to possibly impact the cash flow, we project they may not in the aggregate be sufficient to offset potential cash of holes that could occur in the second half of 2013. now mr. barnett, in your board meetings this year, has the postal service indicated that it may experience a shortfall in the second half of 2013? >> we've discussed every board meeting and the answer is yes the cost-cutting has possibly pushed that date of by not paying our pre-funded payments

and we are not preparing to meet the one that is due on september 30th. >> so there will be a shortfall. >> as you know we haven't made the last payments and we aren't going to make this year's payment we estimate will there be sufficient money to raise the payroll? >> i believe we will for this calendar year the postal service indicated, and i quote in the 2011 the $1.5 billion of total cash and $2 billion of remaining borrowing capacity end of quote. for the year ending september 30, the postal service road and by quote we ended 2012 with $2.3 billion of total cash and no remaining borrowing capacity on our 15 billion-dollar debt facility. and a recent financial briefing

to the committee staff the postal service indicated that the cash revision has continued to improve. do you know how much cash the postal service has on hand? >> i do. we have approximately nine days of operating income. >> how much money is that? >> approximately $2 billion. >> do you agree with this report the growth in the shipping and packaged product is improving the postal service financial condition? >> it is. >> despite the shipping and package service and the postal service still reported a loss of $1.3 billion in the most recent quarter. >> mr. barnett, how much of that is attributable to the refunding

payment due to the retirement health benefit plan? do you know? >> i do not know. >> can you give me that information? >> i am sure the postal service can get you that information. >> i'm not sure that the question -- what's attributable in a relative question you could say all of it is due because all of it is a 5.5 billion but we don't have sufficient cash to make any payment on the refunding. >> the postal service didn't have to make it would be better would you agree on that? >> would be better but not solvent. >> it is certainly concerning that it appears the postal service will continue to remain solvent through the rest of this

year and that the payments were significant factors in the postal service operating losses do you agree with that? >> i don't. i think my colleague would say if we are not meeting our payments to or do we are not solvent and we are not making the payments that are due. >> thank you mr. chairman. >> we now recognize the gentleman from florida.

ha that you choose to obey that actually cause $2 billion. where is the fiduciary balance. that is the lie you broke or didn't break. >> thanks. we do have -- the board has discussed -- the real problem going from 6-five knowing it will be challenged in court and not knowing what the result would be is tens of thousands of dollars that many businesses would have to implement in software updates and changes in their procedures and also involve approximately 23,000 employees that would be directly affected by their futures and transfers and changes in work. >> we got the answer, the union wanted to keep six day and they

didn't mind not paying pursuant to the law. >> this little exercise that we find ourselves in, our g-8 o represented -- he summed it up only partially saying the situation is dire. i think it is beyond buyer and is probably going to get worse. we are headed for a total meltdown of the postal system. the only thing worse than the federal government as far as fiscal shape is united states post office. that is -- there's not much to be said and we have some of the same difficulties facing our fiscal challenges and quite frankly i am not sure the board of governors can resolve this. i was checking and we were able to pass some legislation out of

the committee that could never pass the house and probably wouldn't pass the senate and all the interest here at playmaking certain nothing gets done or bad choices. the board of governors, with the sea are we didn't provide the flexibility and the authority to put you on hold. i think it is going to get worse. maybe that will help us resolve it but two of the primary areas we are going to have to address, one is personnel. i noticed personnel and infrastructure, big cost item, you have first of all personnel, i don't know what you are doing at headquarters but i thought i saw the number rise to 3,008 in the figures that i have of personnel right down the street. not to mention that is adjusted orders but the round is different. that is one thing. do you have a plan to reduce the

overhead as far as management? >> mr. chairman, representative, yes. >> they don't have union contracts or do they? >> there are certain management contracts. >> you are going to have to address that. need a plan to come back, i remember visiting some years ago one of the risks you all did and there were hundreds of vacant death. i don't know if that building is partially -- >> there are empty desks in the building. >> still 3,000 people in b.c. so that is one thing. the facility on previous assignment, you have 32,904 facilities and i asked how many are vacant and they said 166 is what i got this morning. i don't think that is accurate. they may be vacant but there are thousands that are underutilize. the experience in my district

trying to consolidate for change, post office locations in my district, of them are so out of date, so expensive, such for areas for service the problem is the postal authorities are totally mindless. no one can come up with a solution. in one instance i have given you a solution and we were able to turn that into a valuable property but it is a mindless mentality and the post office, not willing to move forward in some of these do you think that can be changed? >> it is changing. there have been tremendous strides going to village post offices and reducing the hours they are open to 2, 6 hours. >> we will be doing some of the facilities to highlight the lack of progress, give you advance notice and i'm not just picking on you. we have done this and we will be doing it next week in our fourth building in washington d.c. the

nation's capital under other jurisdictions than the post office but personnel and management are some things we can tackle and consolidation of the facilities and changing on our yield back. >> i recognize the gentlelady from the district of columbia. >> thank you very much. i may not be here when the postal service themselves come forward. i realize you are here but i want to say for the record, i am certain members of the committee would agree with me that we are enormously indebted to postal service workers, attaching the letter that contained ricin, and kept it from coming to the congress. i think this indicates once again the dedication of postal service employees and their vigilance and the risk to being a postal service employee.

they now become not only postal service employee who see that the male gets delivered but they have a security function and they carry that security function out with great excellence yesterday and i thank you for that. the senate passed a bill last year, this i did not. if i may say so instead of going through the same issues every year in the hearings, days, six day is why don't we just pass a bill and then iron out the differences? this gets to be very repetitive and nonproductive. my major concern and i think about the new model, the need to treat the postal service like the independent business, we spun it off, including the ability to use its extraordinary

infrastructure to fill non postal products. let me get to the issues that have been before us today. is it not true that -- first, let me relate the predicate for this question. they are going into their third year of default on pre funding of health benefits and that is a kind of civil disobedience they report to. the third year, by the way is coming up in september. one affect of these prepayments is to offset the federal

deficit. >> on the prepayments for healthcare, it is basically to provide the money in advance. >> i know what it does. doesn't have the effect of offsetting the deficit or making the deficit look smaller? >> i would have to go back and look at that. i am not sure of hand. the money segregated in a different account for the postal service but i have to check and give you a definitive answer. >> i believe it is interested and use that you would look at that because i think it is the disguise of the deficit, one of the reasons the postal service is seen as having to do, nobody else has to do and that is what i want to get to. is 75 years of refunding health

care consider the best practice? >> the pre funding is considered a best practice. >> that was not my question. this is the only business and the only federal government that it -- >> actually the defense department is free funding. >> how much are they pre funding? >> they are pretending $150 billion. >> how much as the postal service refunded? >> i believe it is about 48 -- 43. >> would you recommend the federal government, why haven't you recommended to other federal agencies best practice, is this what we should be doing and if so how many years in advance? should agencies be doing what the post office alone is doing? >> basically the of refunding is not 75 years, it is 50 years. >> recommend fiftieth refund in every agency? >> i am say what the law requires. >> gee using refunding, do you

think refunding for federal agencies is like a pre funding we require of the postal service is to be recommended to the federal government? if so, why have you not recommended it of federal agencies? >> first of all the postal service is supposed to be self sustaining. >> that is my point. and of course whenever congress wants to interfere, it can. is that how you treat a private business? do you think the post office is being treated like other private businesses? >> it is not exactly a private business. it is still a part of the federal government set up as an independent agency. we have a lot of these organizations that have been set up, fannie mae and freddie mac are other examples and government corporations, fdic or whatever. there are a lot of entities like that. >> with fannie mae and freddie

mac we have bailed them out of the cost of billions of dollars. gee think that is what we should do with the postal service as it becomes insolvent? >> it is all matter for the congress. >> isn't that the direction we're going? >> recommendations are to make changes though it doesn't get into that. >> it is already into that. time for somebody to recommend s that helps them get out of it. and it talked about alternative approaches to fund health care benefits. which of those alternatives would you suggest? >> we would suggest moving to an actuarial basis refunding operation as opposed to the fixed payment schedule. we recognize the fixed payment schedule that was set up in 2006 had large upfront costs, more than you would have in an actuarial basis. we think that would be a good move which is what the senate bill version of the bill would have done.

>> thank you. >> we go to the gentleman from utah. , i have five seconds? a simple yes or no. isn't it true that congress long ago passed laws requiring a minimum actuarial refunding by every pension plan in america held by private companies? you go to jail for not doing it. >> yes. >> thank you. >> appreciate you both being here. what is white house's suggestion that you do? >> i have not talked to the white house. they have not called me. as my colleague from the district of columbia is suggesting time for someone with an idea, you're suggesting the white house has no plan, no suggestions, no direction for you and what you are supposed to do? >> i didn't mean to say that. they have been in contact with the united states postal service, not just not with me.

>> that is one of my concerns, engagement here, there were three general categories, suggestions. what would you agree with or disagree with on that list being out these three? >> i agree with all three and would add a few more, we are in agreement with the three items he mentioned. >> what is prohibiting you from you talk about more flexibility in delivery and pricing, one of those items, and try to make an adjustment there and it gets pull back. what is the hesitation? >> we have a regulator we must file with called the post regulatory commission. it is unduly cumbersome, slow process to do so and in the current marketplace we need

flexibility to move quickly. we would recommend for example of the regulator perhaps the come back and examine the data that was done to make the board of governors decide on a price change or possibly a new price for a new product, give the regulators the chance to go back and examine it and require modifications after the fact but not require the upfront filing, the delays and time to go through it. because it is too slow and there is no flexibility. >> perhaps what we should look at is restructuring that process and how that post regulatory commission works. >> the regulation model we are under is like a utility model from the 1950s, we are a monopoly and we must file for rate increases, go through expert witnesses, we are no longer a monopoly in most of our

products, we certainly are in first class mail, we are in direct competition in almost all other products. >> you want to comment? say something about the discussion? >> no. i agree with the comments. >> mr. chairman, as we look at this issue i really do believe and i believe from day one, one of the core issues we have to grapple with here is how does the postal service become more relevant? there are only so many times you can raise prices, lisa many times you can make your product more expensive than the market place. to me it is a question of relevance. the world is changing. we are becoming more electronic in our communications. people are more cost conscious. the postal service is dealing with difficult things. for instance, for every penny of increase in the cost of fuel they have to deal with that, billions of dollars of cost to the post office. since president obama took

office, the same time i was elected the price of fuel has doubled. that is a real impact on the day to day and lives and solvency of the united states postal service. i do want to complement the work that has been done with some of the unions and some of the others in actually drawing back the number of employees that are engaged. i only wish the rest of the federal government would have to go through such scrutiny. what you would find as bad as dire as the situation is most other departments and agencies don't have to go through these gyrations. they don't have to go on and solar services or justify price, they don't have to live within their means. this is the only agency i can look at that has made significant personnel changes to drive down the number of people involved in this agency. on that side to applaud. on the other side, to my friends in the union there is going to

have to be some more flexibility here. when they talk about collective bargaining they have to have some serious discussions about that. both of these gentlemen concur with that. that is part of the issue and we have to look more closely and have more cooperation in moving to cluster boxes and those simple things with multibillion-dollar effect on the postal service, more inconvenient, maybe somebody isn't able to book as many others but small things will make a big difference in the fall and the of the postal service and ultimately, mr. chairman, become more relevant. i yield back. >> the gentleman yield back. the gentleman from virginia, mr. connolly. >> thank you for holding this hearing. with our distinguished ranking member, mr. dodgeawrote, thank you for the report on the

process. one may not like a lot, but to counsel people circumvented or ignore it is a different matter entirely and g a o made a real contribution in understanding where we were legally and i thank you for that and for your colleagues as well. the opinion into the record, that is the opinion of march 21st and i carried into the record as part of mine without objection. mr. dodaro, you said there were three things that were fundamental to reform. the first thing you mentioned was prepayment. i was a little confused between you and the district of columbia. the first thing congress has to deal with -- i happen to agree with you. i wish some newspapers in the washington post would acknowledge that it is a problem

that you included it. presumably because you do think there is an aspect that is the onerous and needs to be reformed. is that correct? >> we believe that the 2006 law that set up the schedule for this front loaded some of the prepayment penalties, not penalties, the amount for prepayment based on a fixed schedule up front. we think it is moved to an actuarial schedule that would smooth out the payments over a period of time. i want to be clear everything pre funding needs to occur and needs to be done in a fiscally responsible manner and in the best interests of the postal service for their future viability, in the best interests of beneficiary or benefits. >> so stipulated and the chairman correctly pointed out, not a unique requirement but the 2006 legislation has some aspects to it that clearly put a burden on the postal service

that are unique. >> there are means to modify that. >> the senate recognized that in the poster reform bill that passed the senate, is that not correct? >> that is correct. >> you reviewed that legislation. >> yes. >> do you believe that legislation in principle is consistent with your recommendations for comprehensive reform? >> on the issue, on the issue of refunding we agree with two of the three changes they put in place. the only thing that we ask the reconsidered would be the requirement to go to an 80% total funding. we think it should be 100%. >> mr. dodaro, would it be fair to say if we alleviate or reform the 2006 requirement in any fashion that constitute the federal bailout of the postal service? is that a fair characterization?

>> as long as it modifies the schedule as long as refunding occurs to achieve the full cost of post-retirement health care benefits, no, just changing -- >> does the prepayment in any way involve u.s. taxpayer dollars? >> i don't will leave so. >> would be bailout imply that we're using taxpayer dollars? >> usually has that connotation. >> not a commendation, a federal bailout with u.s. taxpayer dollars. if i use someone else's money to help somebody else out that is not a federal bailout. >> with the gentleman yield? >> i would if the chairman would give me -- i thank the chair, the best consideration the chair could give. >> i appreciate it. the chair is prepared to make it very clear on the record that in

negotiations we have with the senate until we hours of the waiting congress, we had already agreed to go to an actuarial statements. i hope the gentleman would agree also that like the railroad retirement act, if in fact we do not get an actuarial payment and there is a default, full faith and payment from the federal government would happen. i'm not expecting a bailout. the reason we agreed to an actuarial one was the g a os finding the 2006 law although well-intentioned was now unachievable with current economic conditions from the post office. >> if we could keep that clock -- >> as long as the ranking member doesn't step forward on that. >> i thank the chairman and glad to learn of those negotiations and the point is well taken. i am only pointing out there has

been some loose rhetoric when there is any talk of prepayments of any kind that that automatically is a federal bailout. that is inaccurate and it is not fair and the money involved so far is not u.s. taxpayer money. it is postal service. >> and if everyone wants to go from $16 billion loss down by $2 billion which would be the restated amount we are happy to say it was only $14 billion had they been making an actuarial payment rather than an actual. the problem is you can't be a little bit pregnant to use an old expression. also will loss of $14 billion is still a lot of money. >> it certainly is. i think the chair. mr. barnett, are you familiar with a memo with respect to five day of delivery proposal? >> i am.

>> did that memo influence the board of governors in its decision to say we have to comply with the law? >> yes it did. >> the u.s. any point in your deliberations before or after the postmaster general's announcement, days, and and the reason he relied on. >> postmaster general and the deputy are members of the board, extensive discussions over several meetings on the first legal opinion dealing with language prior to the current c r so we have had numerous discussions with the postmaster -- >> bottom line, was made the board decide we can't go forward with this proposal? >> the king and spalding opinion was the primary motivator for the change. >> which told you what bottom line? >> that we would be going to

court, the disruption that would occur if a preliminary injunction were issued after particularly if they went to court, a week ahead of the aug. 58 and a preliminary injunction, the destruction to the postal service and also the consumers of the postal service. ..

and some of the catalog areas in the periodicals area they've been losing money on that the last 16 years of in 2012i believe it was about $650 million. so that is one area that he could reprice and the stain on the standard flat mail. they have to adjust the mix because there are varying product some catalogs and other things and there are some other areas where they are losing money on different product as well so that's one thing that they can do. >> do they have anything right now on advertising? that has been discussed whether it is product for sale or a village station or actual advertising on the truck i would assume they wouldn't put a big advertising for fedex on the side of their truck as a part of

selling advertising. but to be able to produce that. >> yes they can do advertising. >> i am sure this has been discussed as well. you have to be with price and product. it's especially difficult for catalogs they are in great competition right now. what has been discussed at this point and how do we strike that balance? >> to give you an example, the catalogs become a feeder for the package delivery which is great growth in our area so we have lengthy discussions and a new director of marketing that came on about a year ago. she's doing a fabulous job. the board of governors has gone to meet with potential customers

or existing customers with potential increases in new york and phoenix and san diego. they tell us what their needs are and we are trying our best to increase revenue everywhere we can. we are under water in several of these categories. we are still stuck with a price cap. we still cannot increase prices in excess of the cpi. so i don't disagree with my colleague's statement here i am not sure that we could get here based on the limit of the underwater products. >> as far as packaging delivery obviously the application will tell you they are getting hammered in a retail box store and there's more and more being shipped. where are we on that in moving towards getting more revenue by increasing the number of packages? >> tremendous success story. we have had three years of 7% growth in package delivery and

we anticipate even further growth. >> you also mentioned as well that refunding is in the best interest of employees. can you talk about that? because there has been a lot pushback to say that a lot of individuals say we don't want to do pre-founding why are we doing mandating but that is in the best long-term interest of the employees. >> yes because at some point if there isn't enough revenue set aside either in advance or being generated at a time the benefits could potentially be changed, so the employees wouldn't receive the benefits they thought they were going to receive. so i think it is in the best interest of the postal service for their future viability and the same for the employees. >> the protection of the ty cherry is in the days ahead. >> thank you. i yield back.

>> the gentleman from pennsylvania who isn't here. okay. >> thank you mr. chair. i'm one of the new folks around here. we pass a budget but we didn't really pass a budget in washington. we use words like sequester. i've never told my nieces or nephews i'm going to sequester their tollways if they don't believe. >> if the gentleman will yield. have you learned exigent today? [laughter] >> it is the penchant requirement because as i understand if i understanding right someone who is not even born could go to work for the post office. already paying for their pension now. 75 years into the future is a

long period of time and by getting a shaking hand know. >> it's 50 years and this is pre-funding only for the people that are currently employed. >> the only requirement, the only agency, is that correct? >> i mentioned earlier the department of defense is doing it for the military that those are appropriated dollars. how the funding comes in from the office we don't have the appropriate. >> we are just checking in on that. the problem i have is when i look at the constitution, which we all have just a few months ago it says we have to establish a post office putting it so to me there is a higher responsibility as we take a look at doing this and therefore we have to make sure that we are providing the services.

in brooklyn wisconsin they rely more on the post office than they do in brooklyn new york. they don't have the other alternatives and we are going to keep people working in the smaller communities in wisconsin and around the country in the post office. one, mr. barnett i guess to questions. the board members briefed with the postmaster decision scheduled prior to it be announced on february 6th. the union representatives will employ and blocked the attack from five to six days. five of the nine all our public interest, public service appointees so there are no union

appointees or business appointees. >> it wouldn't be fair to say the union members somehow blocked. then a question for mr. dodaro i know that they supported this move in the future which again is unique. no other agency in the government does that. when you see the support if you have to look at the post office is doing and essentially if they are going to have to eliminate services in order to do it or they will be cutting the delivery days to make these inflated payments, is that something that is still supported in order to refund this? because we know what a big chunk it was it allows the payments in order to keep that going we are hurting for one wisconsin is that something that you would support? >> in the context in the self

funding operations, yes. if you look at the fact that today declined in mail volume it doesn't look like the revenue base is going to be there to pay the benefits later. they modify the payments given the financial conditions of the postal service. otherwise you are just pushing the problem down the road. >> use in your open to providing additional services like legislation to allow them to be like any other small business and take on some new areas to raise the revenue; is that correct? >> they ought to pursue other revenue areas. when you look into them on postal areas you need to think about the competition with other entities with the be subject to

the same regulatory authorities so it gets a little complicated >> nope. but they need to pursue >> okay. the report from the gao stated alternatives in conjunction with the congress. that the 2006 post reform wall did not required to refund 75 >> you've still got five seconds years of retiree health benefits left. over a ten year period. do you agree with that the gentleman may not have heard statement? a moment ago but i did make it clear that we have always said >> i apologize. >> let me read it. that the $2 billion difference i apologize for them as between the statutory prepayment communicating of your name. and the actuarial responsibility december, 2012 report said the will remove, the challenges the 2006 postal reform all didn't remaining $14 billion. require the usps to fund 75 since you did say you were years of benefits over a ten year period. taking a little privilege from do you agree with that statement? the chair we have supported the innovation fund of the additional dollars. we have to bear in mind the u.s. i'm not equipped. post office does not pay part i read the gao, i read the parking tickets, does not pay testimony and i agree with everything in net. taxes and putting gas taxes and i'm not quite following the

license plate fees and the like. question and i apologize for not so we also recognize that when they want to go into private understanding. areas we have to make sure they are not leveraging the property >> maybe i'm not reading it clearly. tax and so on so there is a the report stated that the 2006 balancing and hopefully you'll to be very active role of the postal reform wall did not require usps to fund 75 years of bill that is being offered in retirement benefits over a ten the house as we speak and i would invite you to do so. year period. >> perhaps the gao -- we now go to the gentleman from tennessee. >> powerpoint is it was only 50 years, not 75. >> thank you mr. chairman. just a few questions. first, mr. dodaro, did they look to see if the modified saturday plan met the requirements of the >> either one to put one last to postal writer? rest, the same report also stated contrary to some claims there is no liability held more contributions made for any future employees who have yet to be hired or yet to be born. do you agree with that?

>> mr. chairman, representative i would like to know if i could the board believes they might consider the prospect that all future hires would go to a defined contribution plan. it wouldn't affect current employees in any way but the future that is a better way of looking at retirement plans. >> we also in the same regard would like to have more flexibility during our own health plan. they have a better plan, a more affordable plan for employees to would >> the federal exchanges aren't looking good. >> we are a part and it is my understanding we have very little flexibility there. >> thank you, gentlemen. >> with the gentleman yield? i might note every member here is leaving and heading to the exchanges of the end of the year

by law. mr. dodaro, using up the rest of the time because it's important that we get this in. if we were to go to no payments to the health care retirement, isn't it true that in a matter of just a few years you'll end up with an unfunded liability and the 45 billion of prepayment would ax by year in a decade or so and you simply have people taking money out that are currently there and no money coming in and the likelihood the post office is not anticipating some windfall of the profits in the future that would pay. >> that's correct. >> if this were a private company and it is trying to be operated as of least a break-even private company. would be their payments, their

actuarial payments into a fund like this? 1 billion, 2 billion, 4 million, right now it is arbitrary. we all agree to that. but the level payments they would make over the next several decades to meet this obligation. >> about $3 billion. >> 63 billion instead of fight and a half. there is a delta and i hope we have made the record straight today that bill lost is less if one were to go to this but would still be a loss of roughly 14 -- >> there is no question this is one of a broad package that is needed to deal with a full range of fiscal challenges to face yet isn't it true if the have statutory authority and a mandate to move from the chute to the curb of curbside delivery the there's been a transition that that transition was slow to a crawl and that is part of

about $6 billion of their committed loss. >> there is some flexibility and based upon what we have seen it is made on a decentralized basis. so, whether they get any pushback from the local communities or not. but you are right in the sense that it's a very cost-effective to do that. in fact how it delivered an address to the door costs about $350 in 2009 where if you go to the centralized delivery boxes it makes a big difference. >> the gentle lady from illinois. >> thank you mr. chairman. mr. burnett on april 10th of this year, the board of governors announced your decision to delay the implementation of the modified scheduled why have they moved to

a five day schedule? >> primarily did you seek his opinion was it an outside legal counsel or internal. >> we do seek a opinion. >> mr. chairman i ask unanimous consent to enter into the record the legal memo dated april 5th, 2015. >> the gentlelady wasn't here at that moment but it's already in the record. >> mr. barnett, and earlier this year, 87 of my colleagues join me in sending a letter to the postmaster at crossing our concern of ending saturday delivery would negatively impact the ability of americans to receive the home delivery of prescription drugs in a timely manner. some of these drugs are not delivered as a package and actually come in first class mail for example by a patch

delivery system, painkillers, psychiatric drugs, some of those are in a patch delivery system as well. among the people but rely on the delivery of seniors from servicemen and women, veterans and the disabled live on the next budget. in the subcommittee hearing last year, the vp of the pharmacy operations of care mark which currently have the delivery contract or tricare testified at ending saturday delivery within packed their ability to remain at current margins and indicated they didn't know this would lead to the cost shifting of customers. have you looked at the impact ending saturday shifting costs to either businesses or consumers. >> the presentations by people from industry, buy people from

the postal service a about what that impact would be. we are not faced -- we are faced with the problem of losing billions of dollars a year and we only have three or four ways to reduce cost of the magnitude to solve that efficiency. and this is one of the largest at $2 billion. it would mean a significant impact. there are a devotees now for emergencies and for the seniors that rely. we don't deliver on sunday so all of the same arguments you used with the truth on sunday. the seniors don't get their drugs delivered or pharmaceuticals delivered. they sometimes don't on monday as well. the postal service in is and has a plan in effect for those people that have an emergency or an urgent need and there were contingent plans that by the way our part of the reason to take nine months or seven months to put it in place where we have

the notification to the carriers about those people that have urgent needs there is a way to shift into packages. they are not as expensive as people think and is also some ability through cbs or others to work at getting the pharmaceuticals earlier on friday for an example so they wouldn't need them on saturday. >> but the cost would still be getting shifted on to consumers and being shifted on to businesses to an estimate some of the tests -- we don't take testimony but some of the presentations to us have been that there wouldn't be any additional cost. there would be a change in the manner in which they would arrive at their mailings. they would have to do them different it for five days as opposed to six. >> the vp of the pharmacy operations, one of the largest pharmaceutical pharmacies in the country disagrees and testified yesterday, accordingly yesterday

understand and very much appreciate what you said that you've been reaching out to business customers and that you understand this issue. can you tell us what types of concerns you have heard and how you may have altered the five day delivery affected by that dialogue. >> we take into account in making this decision. there is a -- there is a 70 billion peace drop in volume, we are now at 60, 66 something billion. when you have that kind of decline you look above modifications the pharmaceuticals will be delivered on weekends regardless in the next panel we will get into that more so it is going to be delivered. but yes all of that is taken

into account. yet we face having to cut several come at least 5 billion more a year and i don't know where else to do it except one big chunk of it is from six to five. >> if the gentlelady would yield for a second, i have chaired that committee and it was my understanding of the testimony that though they have concerns, they were more concerned with an overall cessation rather than the modified plan. i would like to follow up on that objection we will form your specific inquiry for the clarification to include that as a part of the record. without objection we will do that and get that to you including part of the record because that is something we need to do we have to be clear because it is an important issue and make sure seniors are able to get their medications on saturday. >> a very important issue we will follow up on. >> with that we will move to the gentleman from michigan you are

recognized for five minutes. >> thank you, mr. chairman. mr. barnett, with only nine days of liquidity, when do you project that the postal service will run out of cash? >> i am unable to give you a date. we will be down to our projections show today's of liquidity on october 16th. october 15th we will have a large workers' comp premium payment and we think we will be down to today's of liquidity at that time but that is the start of the christmas mailing season when we have tremendous increases in revenue in that quarter starting october 1st. so we probably from a cash flow standpoint albeit not paying, we are going on many more months, maybe a year or two. i do not have a date i can give

you. >> any contingency plans you have right now is based primarily on the holiday season coming up and expanded revenues that come from that. >> mr. chairman, representative, we are in dire straits. we are in real trouble coming and we need reform yesterday. >> do you have contingency plans that you have seen? >> we have discussed contingency plans. mr. chairman, representative? >> has the board approved them? >> we have not had a formal vote on the contingency plans but we have discussed them at length and the postal management knows the opinion of the board about what contingencies would have to do. >> let's move on. were you asked as a board to improve the postal service to

implement a five month moratorium on the processing consolidation? >> we discussed the moratorium. we are a board that represents the public interest. in a part of that public interest is what might be turned politics and we have politics going on when we try to get the conference reform. just as we have announced, we hoped that we could close lots of post offices a wise decision was made collectively by the board, by postal management that that was going to upset congress a great deal. we went to the concept of the village office and reduction of hours in the post offices and it seems to have stopped the political rhetoric or lowered the political rhetoric.

we do keep in rural areas post office is open but there are now two hours a day rather than eight. your postmasters. if you will we try to list as part of representing the public interest. we didn't have specific political considerations do you do a moratorium klaxon we were promised albeit indirectly the comprehensive reform is on its way. like the kid on christmas day i'm waiting for the postal reform but i haven't seen it yet i yield back.

>> thank you mr. chairman. as reported in an article on april 11th, 2013, the postmaster general was quoted without being able to cut back to tickets board advice and ask its employee unions, and did the board of governors authorized the postmaster general to take this action? >> we take that action to the >> okay. was it discussed at the board of governors meeting or any other earlier meeting? >> we had two meetings but it was discussed at both meetings, yes. >> do you know if the postmaster general continues the leaders

negotiating their agreements? >> mr. chairman, it is my understanding that the requests have gone out and he will be here shortly and he can tell you more we haven't had a board meeting since that time. >> so the board hasn't discussed it further. 40% of the world's mail volume. how much of the u.s. mail is handled by the private industry in this country roughly? >> mr. chairman, presented its, we have 100 percent of that. if you are talking about priority mail a package delivery and so forth, i don't know that number. the package is 20%.

the's o of criteria from fit-cls all the way down. >> today's recovery cost of the first-class piece of mail. >> 50% contribution on the first-class mail is the most profitable. >> so what are we charging today for a first-class mail? >> 46 cents. >> you are saying that is a recovery on that piece? >> yes. >> okay. and you are saying the private industry doesn't endeavor in this country they don't get involved in first class mail? >> they are unable to use the

mail box to deliver. they can deliver this to your driveway and front door. when it comes to packages, how do we do when it comes to packages? we are losing revenue to try to compete in that arena. >> mr. chairman, i think we are making money and we increase our revenues by more than $300 million. >> it appears this government entity, the u.s. postal service in earlier testimony i'm getting the feeling that one of the biggest problems we have is to compete in this various levels

and to make in a timely manner to make those adjustments to actually bring yourself in a better revenue positions. >> there are two primary problems to deliver the mail to approximately 150 million delivery sites today to lead the delivery is a growing item while there is a tremendous decline in the mail. and so, it is a system that without other changes is going to absolute failure. you can't continue to have declining male. and my colleagues point out several times that through 2020 we reject to decline in the first-class mail. it's not necessarily we think is a decline after that it is just as far out as we have projected

it. i do not personally as a board of governor i think the mail will continue to decline forever because of the ability of the electronic version and other methods of communication. >> i am not now so here we go. i would like to start out, mr. dodaro, you are with the government accountability office. a nonpartisan organization. you are designed to be the neutral arbitrators, the guys with green and to quote the dragnet tv show you where the fact man people. is that in your organization? >> that's correct. >> as a representative as a large district in south texas and the chairman of the postal subcommittee, i hear from a lot

of postal workers. they come into my office and they will have a nice chat in front of my office. either way, i get a lot from it and i've made some promises to them. that is we need to get down to some of the numbers with refunding. i know we've talked about that a lot today. but i want to be perfectly clear on this so there can be no question. some of these postal and employees are giving some information through the grapevine are some outside organizations. correct me if i'm wrong. if we were to do away with all of the refunding completely, the postal service would still be losing money to the it is that correct? >> that's correct. if we were to go to as some of my colleagues on the other side of the ogle suggested, the more actuarial basis with the senate we would save about two to $3 billion over with the pre-funding requirement is today; is that correct?

we are not pre-funding for